The Las Vegas Housing Market Blog

Case Schiller Home Price Index Shows Gain

2010-04-28T11:24:00.000-07:00

Home price index shows 1st annual gain in 3 years - Business - ReviewJournal.com

While we remain steadfastly cautious about real estate price indices of any kind, it is reassuring to see a gain as a data point in housing prices.

Counterpoint:

Don't start to use the "R word" ("recovery") until the economy has firmly shown 2 consecutive quarters of GDP growth and [our assertion] job growth.

Luxuriously Appointed Home Near Spring Valley Hosptial Priced to Move

2010-04-07T14:54:00.001-07:00

5883 Hawley Ct

Custom Built Home, 3800 sq ft in SW Las Vegas

Absolutely stunning custom built home – only one year old!

This spacious 4 bedroom, 3 ½ bath home is located on an oversized ¼ acre lot inside a gated cul-de-sac community. An elegant exterior with a beautiful desert-landscaped front yard welcomes you to your new home.

The lavish interior boasts imported exotic hardwood floors, ceramic tile and upgraded carpet throughout. No detail has been overlooked, this home offers an endless array of unique details and amenities such as custom paint and moldings, designer fixtures, double sided fireplace, granite countertops throughout, and state of the art stainless steel appliances.

The two story spacious, open floor plan of this spectacular home is absolutely amazing and will impress even the most discriminate. Surround yourself with tastefully designed living areas, an ample and inviting kitchen, and large bedrooms.

Convenient Jack and Jill bathrooms can be found both upstairs and downstairs. The great room on the second floor opens to a large balcony with breath-taking views of Southwest Las Vegas-Perfect for entertaining.

Just a few minutes walking distance from elementary, middle, and high schools as well as Spring Valley Hospital. Conveniently located near Torrey Pines and Hacienda.

Interested parties are invited to contact David Kang (blogger@precisionpei.com) for a viewing appointment.

The Secret to Getting a Great Deal

2010-03-17T16:05:00.000-07:00

Image credit: http://www.edupics.com/en-coloring-pictures-pages-photo-whispering-i13373.html

Unless you've been living under a rock, you know that the consensus in Las Vegas is that there are many good deals available in the housing market. After all, if you can find a home for about half of what the previous owner paid for it back in 2005 or 2006, you're getting a pretty good deal, right?

The trouble is, people are finding that it's rather hard to find one of these homes - when they put in an offer at today's market value, they're being outbid by cash buyers or other homebuyers also looking for a good deal!

We have a client who has written over 10 offers and still cannot get a home, much less one that is a "good deal!" So how can you, a home buyer, get such a good deal? The short answer is that you must listen for "whisper listings."

What's a whisper listing? A whisper listing is a property that is not formally on the market yet. You see, in order to legally allow a real estate agent to sell a property, a home owner has to complete a bunch of paperwork. Since people are busy, that paperwork usually takes about 24 hours. However, the agent who prepared the paperwork for the homeowner knows that the property will be formally on the market in about 24 hours.

This 24-hour (sometimes longer or shorter) "limbo period" in between when the homeowner returns the paperwork and when the agent prepares the paperwork is the magic time. Since no one else aside from the homeowner and the agent know the property is for sale, there can be no competition for your offer during the limbo period.

Agents who list a lot of property maintain close relationships with the homebuyers who want to hear about their "whisper listings." So if you want a good deal, get out there with your agent and start looking! If you want a great deal, get a relationship with an agent and listen for their whispers!

Some Tips to Getting on "The List" for Whisper Listings:

1) Be ready - whispers are available for less than a 24 hour period of time so have your downpayment and financing in order before you start asking agents for their whispers.

2) Be willing - fortune favors the bold so consider writing an offer subject to inspection; you can tie up a whisper before it even hits the open market with essentially no risk. If your offer is accepted, you can "inspect" (go see) the property and if you don't like it, you can cancel. Ask your real estate agent how to make this work.

3) Be able - even in a "down" real estate market, how long do you think the good deals last? According to January's numbers, most houses are selling in less than 60 days. If a good deal lasts at most 60 days, how long will a great deal last?

The scenario of a whispers is a win for everyone: the home owner gets to sell their house fast, the home buyer gets to hear about great deals before they hit the market and become only "good" deals, and the agent earns a good reputation for being able to make the deal happen.

E-mail us and get on our whisper list! Happy house hunting!

Posted By: David Kang

Las Vegas Housing Market Update: December 2009

2010-02-15T15:51:00.001-08:00

Image credit: http://www.lvrj.com/business/housing-haunted-by-sales-statistics-82236467.html

Noteworthy statistics from December 2009:

Median resale price of SFRs: $123,000.00
Median new home price of SFRs: $216,854.00
Existing home volume for 2009: 44,885 (second highest ever on record)

More statistics available from GLVAR here: http://www.lasvegasrealtor.com/media/stats/2009_12_Dec.pdf

Posted By: David Kang

Las Vegas Housing Market Update: November 2009

2009-12-14T14:09:00.000-08:00

Image source: http://www.lvrj.com/business/buyers-chasing-homes-in-las-vegas-as-prices-continue-falling.html

Last week, the Review Journal published its analysis of the GLVAR November 2009 statistics (GLVAR's source document here). Among the notable statistics published in the Review Journal:

3,117 sales closed in Nov 2009.
Median prices in Nov 2009 rose to $140,000 (0.6% from Oct 2009).
41% of all sales were cash (no mortgage).
61% of all sales were REO (foreclosures).

As always, we strongly encourage home owners and home buyers to read the source document for anything published in traditional mass media. In this case, Mr. Smith (the author of the Review Journal article) uses the GLVAR monthly statistics. You can read the GLVAR statistics here: http://www.lasvegasrealtor.com/media/stats/2009_11_Nov.pdf

The following notable points (in our opinion) are found in the GLVAR statistics:

8,385 properties without offers (+3.8% from Oct 2009).
Of the properties sold in Nov 2009, 58.6% were on the market 30 days or less and 16.7% were on the market from 30 to 60 days. The means over 75% of the properties sold were on the market less than 2 months.

Additionally, the GLVAR statistics have some graphs that provide ability to look at the historical trends of this data.

Posted By: David Kang

Las Vegas Housing Market: No "Flood" of Foreclosures

2009-11-19T10:03:00.000-08:00

Image credit: http://www.lvrj.com/business/las-vegas-home-prices-stabilize-as-threat-of-foreclosure-flood-wanes-70448582.html

Today's Review Journal article reinforces what I have anecdotally seen and been blogging about for several months: banks are not stupid enough to flood the market with foreclosures. In spite of their seemingly inexplicable behavior, I've always felt that banks were not stupid.

A "flood" of foreclosures being put on the market, as many have predicted and feared, would drive real estate prices in Las Vegas through the floor. This subsequent drop in prices would also make banks' losses intolerable, so it's my feeling that they'll continue to do what they're doing: dole out the inventory as slowly as possible to reduce their losses and keep prices afloat.

Las Vegas has already seen 3 months of price increases in 2009, which could be supporting evidence for this strategy. Of course, critics will say that these increases in price are a "false bottom" and at any moment, a bank could start pouring inventory on the market.

This is a true statement but I believe it is a scenario of mutually assured destruction: pouring inventory on the market depresses prices; depressing prices causes even bigger losses; even bigger losses may cause failure of the bank. Why would they do that?

I don't think they would.

Posted By: David Kang

Las Vegas Median Home Price Rises Again

2009-11-16T12:30:00.000-08:00

Image credit: http://www.marketoracle.co.uk/images/housing-bust.jpg

According to the Review Journal's article from the 9th, Las Vegas single family home values rose for the 3rd time in 2009 and for the 2nd consecutive month in October 2009. Currently, the median price in Las Vegas is $139,100. Additionally, only 8,075 housing units do not have offers on them.

Given the sales pace of 3,535 in October, levels of inventory are shockingly low. It would appear that the paradox of the Las Vegas housing market continues.

Posted By: David Kang

Las Vegas Housing Projections Totally Inconsistent

2009-11-08T23:04:00.000-08:00

Image credit: http://www.zgeek.com/forum/gallery/files/6/3/2/escher_crystal_ball_original.gif

For homebuyers and homeowners looking for clarity into the future of Las Vegas' housing market, many of the experts are publishing prognostications that have a shocking degree of variance. In Friday's In Business article, the real estate oracles say that Las Vegas' market could fall anywhere from an additional 5% to and additional 25% by mid-2010.

That's quite a spread; as a homebuyer, saving another 25% on the purchase of a new home may warrant waiting until 2010, even if it means missing out on the $8,000 first time homebuyer tax credit ($6,500 tax credit for qualifying "move up" homebuyers).

Then again, it might not be worth waiting if prices only move another 5%.

I submit to you two blasphemous ideas:

Idea 1: You cannot time the market, so don't try. Unless you predicted the top of the market to the month in 2006, you have already proven to yourself that you don't have the capacity to time the market. If you did, you would have been able to "call" the top of the market and you would be worth more money than Warren Buffet by now. Don't feel bad - no one has been able to time the market (real estate or otherwise) successfully over a long period of time in all of human history. Congratulations - you are a human being!

Idea 2: As a homebuyer or homeowner, it doesn't make a difference if the market goes down a little more. Homebuyer: do you need a place to live in now? Yes? OK, great. Are homes cheap now? Yes? OK, great. Once you buy a home and move in, do you plan on trying to sell your home immediately for a profit? No? Then it really makes no difference what the home is worth, does it?

Homeowner: are you living in your home now? OK, great. Are you trying to sell it now? Yes? Then get aggressive with your pricing. No? Then why does it matter what your home is worth?

Counterpoint:
I am a real estate agent. I earn my living by helping people buy & sell homes and investment property. Some of you may believe that all I care about is my commission; many real estate agents do only care about their commissions. You may also believe that anything I say & write is "spun" in such a way so that I encourage everyone to buy/sell now.

The truth of the matter is that I bring logic and reason to my clients, especially those who seek a "crystal ball" to help them decide what to do. Here's my opinion: buy a home to live in - if you hold it long enough (10+ years), you will probably make money. Homes are cheap now. Interest rates are low now. Homes might get even cheaper - even the experts cannot agree. Make your decision based on data, logic, and your comfort, not on someone else's crystal ball, especially when the crystals are this cloudy.

Posted By: David Kang

Las Vegas Foreclosure Rates by Zip Code

2009-11-01T22:23:00.000-08:00

Image credit: http://www.lasvegassun.com/news/2009/oct/27/recent-foreclosures/

Last week, In Business published this image regarding Las Vegas' foreclosure rate. I think it's a fantastic reality check - there are areas of Las Vegas (notably 89134 - Summerlin and 89005 - Boulder City) that really haven't been severely affected by foreclosures.

It's also worth noting how much foreclosures have fallen off (overall) between 2008 & 2009.

Posted By: David Kang

How Homes Are Valued Part 3 - Comparables

2009-11-01T21:34:00.000-08:00

Image credit: http://img.dailymail.co.uk/i/pix/2008/04_05/tripletsMEN2504_800x590.jpg

Welcome to part 3 of my multi-post series on how homes are valued. While not designed to be a college-level course on appraisal, this series of informal posts is designed to provide clarity into the sometimes murky question of, "How do I know what that (my) house is worth?"

If you missed the first two parts, you can find them here:

Part 1
Part 2

The graphic at the beginning of this post is arguably the best method of determining what a given home is worth. While homes differ significantly from investment property in how they're valued, the method of finding sales comparables is the most frequently used, especially in Las Vegas housing.

So what's a comparable? As I discussed in Part 1, a comparable is a house that is similar in terms of condition, amenities, location, size, and time. So, for instance, if you own an immaculate, 10 year old, 3 bedroom, 2 bath, 2 car garage, 1,500 square foot home in Summerlin, in order to find comparables, I would look for properties that have similar characteristics. The only "twist" that I would have to add is that a property that has not sold is not a comparable. Once the property has sold and its sale is recorded, it can be considered a comparable.

How do I get this information? Candidly, as a homebuyer/homeowner, it's a bit frustrating. As a Realtor, we can use the MLS (multiple listing service) to quickly and easily find comparables. I don't know of an easy way for non-Realtors to do this but most Realtors generally will provide you a list of comparables for your property upon request as a way to earn your business.

A few other interesting tidbits about comps:

Comps over 90 days old generally cannot be used - especially when the market is moving very quickly.
Geographically, comps are ideally within the same subdivision or a 0.25-mile radius of the subject property. This is frequently not possible when combined with the 90-day time limit, so I increase the radius in 0.25-mile increments until there are enough comparables to make an opinion.
The comps (and even a formal appraisal) is an opinion of value; retaining 3 different Realtors (or even 3 different appraisers) will create 3 different opinions of value.

Posted By: David Kang

How Homes Are Valued Part 2 - Valuation Websites

2009-10-20T22:02:00.001-07:00

Image credit: http://img2.timeinc.net/toh/i/g/houses/1208-smart-money/smart-money-x.jpg

We've all done it. In times of change, for better or worse, we've headed to a housing "valuation" website to see what our property is worth. Prior to the proliferation of the internet, how else could we so easily (and seemingly privately) find out what our homes (or other property) is worth?

There's just one problem with the valuation(s) that these websites produce: they're usually wrong. Generally speaking, valuation websites use an opaque (i.e. "secret") mathematical formula to determine the values of properties. Here's the text from a FAQ (frequently asked questions) of an extremely popular valuation website.

I've added emphasis below:

"The [estimate] home valuation is [our] estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home's value. The [estimate] is pulled from data; your real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account. Variations in price also occur because of negotiating factors, closing costs, and timing of closing.
. . .
We compute this figure by taking [removed] data points - much [but not all] of this data is public - and entering them into a formula. This formula is built using what our statisticians call 'a proprietary algorithm' - big words for 'secret formula.'"

As I read this, this website uses a "secret formula" to compute your property value based on unidentified variables but does *NOT* take into consideration your special features, location, and market conditions. The estimate produced may have some relationship to reality but with this disclaimer, we're led to understand that the relationship is thin, at best.

The website goes on to discuss just how accurate their valuations are and cites several marketplaces as well as the median error between their estimates and the actual properties' sold prices. The smallest error on this list was 7.6% and the largest was 34.2%. Las Vegas, incidentally, was not on this list.

I'm sure you would agree - if you were my client and I let you overpay on your next home by somewhere between 7.6% and 34.2%, you'd be calling your lawyer. Similarly, if you were my client and I let you undercharge on the sale of your current home by somewhere between 7.6% and 34.2%, you'd want to kill me, also.

It is very easy to dismiss this post as an intentionally written, self-promoting, one-sided argument written by a real estate agent; Realtors earn their living by helping buyers and sellers buy and sell homes, respectively. In my next post, we'll cover exactly how Realtors professionally generate an opnion of value for your home - without "secret formulas" and taking into consideration special features, location, and market conditions.

In the meantime, please take those valuation websites with a grain of salt. Actually, a lot of salt. Heck, just use them for entertainment!

Posted By: David Kang

How Homes Are Valued - Part 1

2009-10-19T22:10:00.000-07:00

Image credit: https://freestimulusfacts.com/Home_Page.html

At the risk of being too basic, I'd like to address some fundamental concepts regarding real estate valuation, specifically with respect to homes. This discussion does not include anything having to do with investment real estate or income property.

Most people "get" that a home is valued based on its "comps" (short for "comparables"). But what exactly is a "comp?" Is it the home next door? What about the home across the street?

Generally speaking, a comp is a home that is similar in several major categories (in no particular order):

Condition (age, serviceability, etc.)
Amenities (pool, fireplace, spa, granite counters, etc.)
Location (duh)
Size (duh)
Time (i.e. recorded within the last 90 days)

There are several things to note here:

1) No two properties can be identical due to the difference in location (even if they are built on top of one another like condominiums, they're still different because one is below the other).

2) The time factor is surprisingly short. Ninety (90) days is about three (3) months. Properties sold outside of this window, while interesting, cannot generally be considered a comp.

3) What the owner paid for certain upgrades and what the owner paid for the house have NO BEARING whatsoever on the property's current value. If we're a little more snobbish about our English, we could say that the primary determinants of a home's value are external to the home itself (i.e., comps).

In a down market, this may seem grossly unfair - after all, you may have paid $500,000 for a house that is now worth about $250,000 (an accurate statement from 2006 to 2009). Has the house changed? Not really. What's changed? The comps.

Tune in next time when I explore how to find "comps" and when I explode the myth of "valuation" websites.

Posted By: David Kang

Las Vegas' September Home Sales & Price Rise Again

2009-10-13T11:02:00.000-07:00

Image credit: http://www.lvrj.com/business/home-sales-median-prices-rise-63916787.html

Friday's article in the Review Journal reported several interesting data points for homebuyers and homeowners:

The median price of a home in Las Vegas increased (for the 2nd time in 2009) 1.8% from August to September to $138,000.
The number of homes sold in Las Vegas increased 4% from August to September to 3,358 homes.
Available inventory fell to less than a 3 month supply (only 7,909 units available without offers).

With the 1st time homebuyer tax credit deadline rapidly approaching, I anticipate a tremendous crescendo of activity up to approximately November 15th.

Most notable quote from the article:

"Surprisingly, the avalanche of foreclosures predicted to hit Las Vegas has failed to materialize, said Larry Murphy, president of SalesTraq, a Las Vegas-based housing research firm."

I've spoken and written about the "doling out" of REO inventory and maintain my assertion that the banks will continue to release inventory extremely slowly in order to keep a floor under prices and to reduce their losses.

Posted By: David Kang

Las Vegas' Housing Market Paradox Continues

2009-10-04T23:52:00.000-07:00

Image credit: http://www.poetry-chaikhana.com/Forum/viewtopic.php?p=48778&sid=4b199495729cd8cb32cb66f2b1081828; M.C. Escher.

As I've written previously, no one alive has seen Las Vegas' current housing market - it is a paradox: the combination of scarce inventory, stagnant prices, and (allegedly) impending foreclosure inventory confounds conventional wisdom.

Look at the statistics published in In Business on Friday:

40.2% of all Las Vegas' home sales in August 2009 were sold to non-owner occupants (i.e., investors). This is an all-time record - even when compared to the boom years of 2003 - 2005.
45% of all Las Vegas' homes sold in August 2009 were sold for CASH.
The annual pricing growth rate of Las Vegas homes was only 0.22%, compared with 3.8% nationwide.

Some notable quotes from the article:

“I think in a year or two, those buying now are going to look like geniuses.” (Larry Murphy, Salestraq)
“Buyers are no doubt finding that prices aren’t what they expected and that there are fewer cheap foreclosures on the market.” (Andrew LePage, Dataquick)
"Those people looking to buy and live in a home were facing multiple offers and lost out to cash buyers." (Andrew LePage, Dataquick)

Again, this flies completely in the face of conventional wisdom; mass media predicts anywhere from an additional 20,000 to 60,000 foreclosures before the end of the year so cheap homes should be abundant, right? What mass media has *NOT* reported is how lenders are placing these homes on the market.

Since lenders appear to control the vast majority of home sales, our experience (consistent with most other residential real estate agents) is that lenders are selling their foreclosures as slowly as possible. We speculate that the reason for this is to keep a floor below prices; in other words, if lenders were to suddenly list 20,000 homes, they would be abundant and prices would be exceedingly low. But this is not the case, contrary to the belief sensationalized and perpetuated by various media sources.

Just this week, we had a client blow up at us because when we ran a search for their "perfect home" only 3 properties showed up. They were convinced we were trying to take advantage of them. Nothing could be further from the truth - there is simply NOT that much inventory out there. And as a homebuyer, you're competing with a lot of investors, who have cash.

Read up on our earlier post regarding how to get an edge on your offer in the paradox market.

Posted By: David Kang

Offer Strategy: Get Your Offers Accepted The First Time - Part 5

2009-10-02T11:10:00.000-07:00

Welcome to part 5 of our offer acceptance strategies!

The first 4 parts can be found here:

Part 1
Part 2
Part 3
Part 4

Tip 23: Make your offer "clean." What is a "clean" offer, exactly? As incredibly stupid and/or obvious as this may seem, fill in all the relevant blanks on the form and if the blank doesn't apply, fill in "N/A".

Tip 24: Specify a realistic time for the seller's response. Remember our poor asset manager with the hundreds or thousands of properties to sell? If they receive an average of 5 offers per property, how long is it going to take them to even read the offers, much less respond to them? In an regular seller's position, 5 business days may be very reasonable - in a short sale/foreclosure situation, perhaps 10 or 15 business days is much more reasonable.

If you were an asset manager and you (literally) had another 500 offers on your desk for various properties, would you bother to respond to an offer that expired in less than 24 hours in the future?

Tip 25: Use the appropriate Short Sale Addendum/REO Addendum (respectively). Another shameless plug for using a Realtor: we take constant training to adapt to changing market conditions. These forms have now been adopted by the GLVAR and should be a part of every offer on a short sale or REO property. In other words, someone you don't have to pay does the work of keeping abreast of all the latest changes in the market - how good will your offer look if you do not have these addendums?

This concludes our 5-part segment on how to get your offer accepted, the first time. We hope this has proved useful for you!

Posted By: David Kang

Offer Strategy: Get Your Offers Accepted The First Time - Part 4

2009-09-21T23:00:00.000-07:00

Image credit: http://users.rsise.anu.edu.au/~sandun/summerProj0809.html

At the risk of becoming an insomnia aid rather than a real estate blog, we continue our series on offer strategy in the Las Vegas paradox real estate market (read more about the paradox here). This is part 4 of a multi-art series.

If you missed the previous parts, this part won't make much sense so here are links to the previous sections:

Part 1
Part 2
Part 3

On to the strategies! Our standard disclaimer applies: nothing written here is legal advice and you must consult your attorney, accountant, and/or investment advisor before making any decisions. And for cryin' out loud, if you're regarding a blog as legal advice, you desperately need to retain an attorney to help keep you out of trouble.

Tip 19: Specify a dollar amount for seller's contribution to lender's fees. This is a huge yet subtle distinction. Let's say you're purchasing a $100,000 property; in page 5, Section F of the GLVAR purchase agreement, there is a section to allow the buyer to ask for a contribution by the seller to Buyer's Lender, Title, and Escrow fees. While asking for 3% of the purchase price versus $3,000 is exactly the same, asset managers prefer seeing $3,000 instead of 3%. Learn something new every day, doncha?

Tip 20: Pay for your own home protection (warranty) plan. Remember, this is what we call a "nibble." A nibble is a small concession for which you can ask the seller which could be worth a lot more than a small concession to you but costs them very little. It can be the doorway to asking for a bite or it can just be something to sweeten the deal. In any case, if you try to nibble the asset manager, you're probably going to get a bite of thin air in your offer.

Tip 21: Consider reducing your due diligence period. Remember that the asset manager's job (and compensation/bonuses) is directly related to how many properties s/he can dispose of in the shortest amount of time. Reducing your due diligence period can show a number of things to the asset manager like confidence, buyer sophistication, and commitment. Additionally, you may be able to tickle his/her greed gland, which is always a good thing. CAUTION: in reducing your due diligence period, make absolutely sure that your inspectors can deliver reports and you have ample time to review those reports within the due diligence period. Shameless plug for using a REALTOR: Having a good real estate agent can help you assemble the crack team who can crank out these inspections faster.

Tip 22: Consider signing the "liquidated damages" clause. This seems scary, right? It's not - it's used in commercial real estate all the time. Essentially, this clause (page 8, Section 18 B, GLVAR purchase agreement) says that in the event that the Buyer defaults, it's going to be difficult to figure out how deeply the seller was harmed ("damages"). So, instead of dragging that process through court, let's agree in advance that if the buyer defaults, the damages will simply be the amount of the buyer's deposit.

Again, this shows commitment and if your intention is truly to close escrow on the property, the amount of risk is relatively small. CAUTION: be sure to evaluate your contingent risk (i.e. risk that s**t happens), especially around your financing before signing liquidated damages.

We're just about complete! Tune in again soon for more tips & strategies!

Posted By: David Kang

Offer Strategy: Get Your Offers Accepted The First Time - Part 3

2009-09-18T23:50:00.000-07:00

Image credit: http://www.91degrees.co.uk/3dmod-3.html

Welcome back to part 3 of our series on offer strategy. If you missed part 1 and 2, you'll want to read those first. Click here for part 1 and click here for part 2.

Tip 13: Consider paying for all title and escrow fees. In Clark County, we customarily write offers such that escrow fees are split 50/50 between buyer and seller, the lender's title policy paid by the buyer, and the owner's policy/real property transfer tax paid by the seller. While this may or may not tip the scales in your favor, try to imagine how you would feel about the situation if the tables were turned and you were offered title & escrow fees when you were the seller. We strongly suggest that you get a thorough understanding of what these could be before offering to pay them all - speak to your title representative but at the very minimum, write your offer in accordance with customs for your area.

Tip 14: Consider paying for all of the prorations. This is a similar story; our custom in Clark County is to write offers such that CIC (common interest community; a.k.a. "HOA") assessments are paid by the seller but the buyer pays prorated CIC periodic fees (HOA dues), SID/LID/Bonds/Assessments, Sewer Use Fees, and Real Property Taxes. Again, this could be in the thousands of dollars so get very crystal clear on just how much money you're offering in concession here. By the way, you might be able to use Tips 13 & 14 without costing nearly as much by asking for some of that money back in a later section of the offer. Read on. Again, in using this tip, write your offer at the minimum to be customary for your area.

Tip 15: Pay for your own appraisal, CIC capital contribution, CIC transfer fees. This is just customary in Clark County - if you're trying to buy a property and trying to make the seller pay for all of these things, we kindly ask you to remember how the asset manager views your level of commitment to the property. Asking the seller to pay for these things is kind of like asking your college to pay for your pencils and paper.

Tip 16: Consider waiving your inspections. Whoa, Bessie. Are we nuts? No - not really. We're speaking specifically about lines 12 through 30 of the GLVAR purchase agreement form under section C. Checking the "waived" box here does *NOT* mean that we will not be doing these inspections, it just means that the purchase agreement is not contingent upon these inspections.

Here's another point that's not obvious from the purchase agreement. In the event that you are financing this property, checking the box (even if it's "paid by buyer") pretty much guarantees that your lender is going to want a copy of these inspections. And if they want a copy of these inspections, guess what's going to happen to the timeframe? After all, they've got to have time to review it, right?

Anything that affects timeframes negatively is going to really put off the asset manager. Consider waiving the inspections in this purchase agreement section and do them anyway. Remember you still have a due diligence period - if it turns out that the property doesn't have a foundation, you're going to find out in your foundation inspection report during the due diligence period.

This particular tip could tip the scales in your favor if you're competing with other offers that have a lot of inspections checked, even if the buyer is paying for them.

Tip 17: Consider waiving your certifications. This is pretty much the same tip as the previous one and it applies to the GLVAR purchase agreement section D, lines 39 through 44. Remember, the asset manager is a human (although some buyers debate this). S/he has emotions. How can you structure your offer to make him/her feel the best about your offer?

Tip 18: DO NOT ask the seller to commit any funds to fix anything. Like it or not, distressed properties (short sales & REOs) are pretty much sold as is, where is, caveat emptor. You have a due diligence period so use it. Asking the seller to commit even $1K to fixing things when they're losing tens or hundreds of thousands of dollars (and more for every day that passes) is going to get you banished to the "ignore offer" pile.

Is this legal? Sure - if you're a seller, you can absolutely refuse to fix anything or issue a credit to a buyer who wants stuff fixed. Is this right? That's a question for a philosophy class. Should it be another way? Maybe. But this is how it is in the market now. It's a bit like saying that the sky should be green instead of blue. We can huff and puff about it until we're blue in the face (no pun intended) but that's not going to change the color of the sky.

Wow, this is shaping up to be quite the series! Tune in again soon for more tips!!

Posted By: David Kang

Offer Strategy: Get Your Offers Accepted the First Time - Part 2

2009-09-17T10:46:00.000-07:00

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Welcome to Part 2 of Getting Your Offers Accepted the First Time; if you missed Part 1, you can click here. We gently remind you that nothing written in this blog is advice of any kind and you must consult your attorney and accountant before making any decisions, especially financial ones.

Tip 6: Consider removing your financing contingency altogether. Remember, most purchase agreements are written with a due diligence period, within which you may cancel for any reason without penalty. If you are pre-approved and already have your downpayment in escrow, removing your financing contingency could be a calculated risk to show confidence, financial strength, and most of all, commitment. Additionally, just because you remove financing as a contingency does NOT mean you're giving up your right to get financing on the property.

Tip 7: If you have the capability, consider paying all cash (and refinancing later). This one should seem obvious - few things are as strong and as smooth as all cash offers. It is very noteworthy that cash offers seem to be more popular with asset managers around the 15th of the month because their performance-based bonuses (based on how many properties they divested) are paid to them on the 25th of the month. It's a bit like going into an auto dealership to negotiate the best price at the end of the month . . .

Tip 8: Use Section 2.A. (GLVAR form) to reiterate your pre-approved status. Rather than writing in this blank, you can write "DONE". This is a very small item that we've been told that asset managers are looking for - offers without pre-approvals simply will not receive a response.

Tip 9: DO NOT write an offer contingent upon the sale of another property. Let's pretend you're the seller in a normal market (not even stretching as far as pretending to be an asset manager in a distressed Las Vegas market). How would you feel about an offer to purchase your home that's dependent on the sale of another home in a place you don't know or understand? Writing contingent offers almost guarantees that your offer goes straight into the "waste of time and don't even bother to respond" black hole.

Tip 10: On bank-owned (a.k.a. "REO", "foreclosures") DO NOT write an offer that includes the sale of personal property such as refrigerators, washers, dryers, etc. The financial institution does not legally own the personal property because they only own the real property. They (shockingly) will not go out of their way (remember the asset manager with 500 properties to sell) to make this accomodation for you. You may get the personal property anyway when the property conveys but do not make it a part of your offer. If you do, you risk banishment to the "to be ignored forever" pile of purchase agreements.

Tip 11: Allow the seller (especially in the case of bank-owned properties) to choose the title and escrow company. While you may have a strong preference for a given title/escrow company/officer, imagine the asset manager's preference for using the same title/escrow company/officer given their stack of 500 properties to sell! Realistically, this concession will make little or no difference to you but failing to make it can get your offer banished to the black hole again.

Tip 12: Close escrow BEFORE the 25th of the month. Since many asset managers receive their performance based bonuses at this time, your close of escrow literally represents money in their pocket (see also Tip 7 of this post). Writing your purchase agreement to read, "On or before the 25th of X" gives you flexibility and can tug on their purse strings.

Tune in tomorrow for more tips!

Posted By: David Kang

Offer Strategy: Get Your Offers Accepted the First Time - Part 1

2009-09-17T00:01:00.000-07:00

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As many experienced buyers & agents can attest, trying to buy a well-priced home in the Las Vegas area can be extremely challenging right now. Homebuyers may find themselves making 10, 15, and even 20 offers before they get one accepted. In addition being very costly from a time perspective, homebuyers may be tempted to just "settle" for a house just to end their seemingly endless cycle of offer-rejection/no response.

How can you (the homebuyer) dramatically increase your odds of having your offer accepted on the home of your dreams? While nothing works 100% of the time, the strategies within this post can be used to increase your chances. We take this opportunity to gently remind you that nothing written in this blog is advice - you should consult your attorney and accountant before making any decisions; these are our opinions based on our experience.

Tip 1: Use a REALTOR. Resist the urge to simply dismiss this piece of advice as self-serving and consider the following: REALTORs have a license and they are involved in the business of helping home buyers like you purchase a home - that's how they earn a living. They are "in the trenches" of the real estate market, day in and day out. They read, train, and write extensively (OK, that one sentence was self-promoting).

You might be able to save yourself a little money by doing everything yourself - that is true. You can also save yourself money by removing your own appendix but given a choice, wouldn't you rather have expert help? There are many cases of home buyers who purchased a property without a REALTOR and found themselves with a new title in addition to homeowner in about 6 months - PLAINTIFF. Save yourself the headache. Besides, in most cases, using a REALTOR as a homebuyer is free.

Tip 2: Get PRE-APPROVED (not just pre-qualified) for your mortgage if you are not paying cash or arranging private financing. While the terms seem synonymous, they are not. A pre-approval is a much stronger level of commitment from your lender and from the seller's perspective, you are that much more likely to close on their property.

Tip 3: Use standard GLVAR forms. Most MLS listings today assume that your offer will be written on a standard GLVAR form. Just because it's a form doesn't mean you and/or your attorney cannot make any modifications to it; attaching appropriate addendums commonly accompany offers written on GLVAR forms. Why does this matter?

Let's pretend you're an asset manager for a bank (a scenario common in more than 70% of August 2009's transactions). You have 500 properties on your desk that you need to sell - maybe 100 of which are in Las Vegas. You receive 5 offers (again, a common scenario). Four of them are written on GLVAR forms, which you are familiar with. The final offer is typed and different than all of the other ones, requiring you to send it to your legal department for review before you can accept it. Do you send it to your legal department or just toss it into the trash bin? In our experience, the latter is happening for offers not written on GLVAR forms.

Tip 4: Show your commitment by using aggressive EMD (earnest money deposit) strategies. Most properties have a very nominal deposit amount requested in the listing - somewhere between 1% and 3% of the purchase price. When you've found the house of your dreams, show that you're really committed to this property by adopting one or more of the following strategies:

a) Put 2x or more of the requested EMD into escrow. Remember, your money is safe in escrow until the contract provisions state that it can be released to the seller.

b) Put your entire downpayment as your EMD into escrow. If you're the seller, how committed does this buyer look? Let's say that the property is $100,000 and your downpayment is going to be 20%, or $20,000. When you have 5 offers on your desk and 4 of them have a measly $1,000 deposit but one buyer shows $20,000 in escrow, who do you feel is most serious about closing on the property? You haven't risked anything more as a buyer - you've just shown financial capability and commitment, something that all sellers look for.

c) Release some or all of your EMD to the seller after your due diligence period expires. This can be perceived as a riskier move but in actuality, the GLVAR contract (when executed with liquidated damages) specifies that in the event of buyer default, the seller keeps the deposit, so your risk is the same.

All you're doing is showing commitment (again) that you're going to close on this property, come hell or high water. This is a common clause in commercial real estate transactions under normal market conditions. Again, it shows financial capacity and commitment, and it can also show sophistication - you look like an experienced homebuyer who's not afraid to say without hesitation, "Mr. Seller, I AM going to close on this property and I'll put my deposit where my mouth is."

d) Attach a physical cashier's check (payable to escrow, of course) to your offer for your EMD and have your REALTOR physically present the offer (if possible) to the seller. While this may not be plausible given the number of properties that are being handled by asset managers, a physical check works wonders on all people.

e) Consider "key money." Commonly used in commercial real estate leasing in times of high buyer (leasee) demand, "key money" is money paid to the seller (or landlord) to induce the seller (or landlord) to accept a purchase agreement (or lease agreement). The "key money" may or may not be applied to the purchase price (lease payments) of the property, depending on how your offer is structured.

We realize we're breaking paradigms, especially if you are under the misconception that Las Vegas is still a buyer's market, but realize that 99% of residential purchase agreements do not offer key money. What easier way would it be for you to make yours stand out? And if you make the key money applicable to the purchase price, you may be able to distinguish your offer and get acceptance for no additional money. We've seen key money as small as $250 make the difference between getting an offer accepted and not. We've even see $500 of key money sway the difference over several thousand dollars of purchase price difference. Invoking the emotion of greed in the seller can be a very powerful strategy indeed.

Tip 5: Have realistic financing contingencies. If you haven't been reading, the days of no money down are pretty much gone. Perhaps not forever but certainly for the foreseeable future. Remember the asset manager - his/her job is to get these properties sold! If you show that you're going for 100% financing, s/he knows you're just not likely to get it and therefore not likely to close. If you're not likely to close, s/he is not likely to accept your offer (or even send you a response to your offer!).

Realistic financing contingencies means working closely with your lender to ensure that your terms (interest rate, amortization period, monthly payment, loan to value ratio) are all copacetic - see why it's important to get pre-approved? You need that information (see tip 2) in order to use this tip!

Tune back in tomorrow for Part 2 of our offer strategy series!

Posted By: David Kang

Buyer Tips for Las Vegas' Paradox Real Estate Market

2009-09-16T09:51:00.000-07:00

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Forget what you think you know about the Las Vegas real estate market. Especially if you've been paying attention to any sort of media coverage about it (unless the media is real-estate specific). The truth of the matter is that no one alive in Las Vegas has seen a market like the one we're in now.

In this blog entry, we will debunk myths, provide facts, and provide tips on how you can take advantage of this market.

Myth 1: It's a buyer's market out there and I can "steal" a property.

Fact: The Las Vegas market for properties under $200,000 is extremely competitive and in many cases, there are multiple offers above asking price.
Tip: Stop reading, watching, or listening to media headlines. Look for the data within! While it's not necessary to become a local economist just to buy a home, you want to be armed with accurate information, not hype. Occasionally check out our investors' blog, which is more analysis-centric.

Myth 2: I can buy a property with little or no money down.

Fact: The days of 100% financing are gone - maybe not forever but definitely for the foreseeable future.
Tip: Due to the competitive nature of the market, you may want to consider getting pre-approved (a step beyond pre-qualified) for financing in advance of looking at property. This will allow you to move quickly against all of the other offers that are going to be submitted with the property.

Myth 3: It doesn't matter whether I get my offers accepted so I can write anything I want.

Fact: While it's true that your agent must legally write essentially any offer that you want, you only have one reputation. Since many of these properties are handled by the same financial institutions, if your reputation within the institution is one of a "lowballer" or "offers unrealistic terms" it could negatively affect your ability to have your future offers accepted.
Fact: Refusing to "invest" a little skin in the game (i.e. paying for your own home inspections and put earnest money down) is going to put you at a huge disadvantage when it comes to having your offer accepted, especially when compared to the 42% of buyers out there who are buying with all cash. Let's turn the tables a bit here - if you were the seller and you received 2 offers: one all cash, standard deposit size, and buyer pays inspections; the other 3.5% down, no deposit, and seller (you) pays for inspections, which one would you accept?
Tip: Shopping for a home is probably one of the largest financial decisions you'll ever make - while you want to be comfortable with your decision, understand that many others like you want the same thing and in some cases, the exact same property. Make offers on properties that you actually want to own and show commitment to the seller.

Myth 4: Prices are still going down so I have plenty of time.

Fact: Yes, prices decreased 2.5% from July to August. However, given the level of competition in the market and Ben Bernanke's announcement to the end of the recession, many feel that the bottom is now or very close at hand. There are many, many other signs that the local Las Vegas economy is turning around.
Tip: By definition, exactly one sale will happen at the very bottom of the market. If you're in the market for a home now, you may want to consider how lucky you think you are - there were over 3,200 sales in August alone; your odds of being the absolute bottom of the market seem rather slim. It helps to compare today's prices to prices of just 3 years ago - they're still around 50% off. That's like going to an after-Christmas sale in January, except you can buy a house that way.

Next time, join us as we blog about offer strategies to get your offer accepted!

Posted By: David Kang

Exceptional Values North Las Vegas

2009-09-09T11:11:00.000-07:00

Image credit: http://www.lasvegas4us.com/greater_las_vegas_zip_code_map.htm

At first glance, Monday's Las Vegas Business Press article does not paint a pretty picture of North Las Vegas. Reading the article, we might be led to believe that North Las Vegas is rapidly turning into a ghost town.

While driving through North Las Vegas now can be a bit depressing, the situation may be temporary. Homebuyers with additional vision for the future may want to consider evaluating the area to extract the maximum home for their dollar.

Posted By: David Kang

Las Vegas Home Prices Below Case-Shiller Index

2009-09-07T13:05:00.001-07:00

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Good news for potential homebuyers - Las Vegas' pricing now reflects levels of affordability not seen in the market since the early part of the decade. In August 26's Review Journal article, Las Vegas has dipped below the Case Shiller basis line.

While buyers must be very careful in using a national index to evaluate local real estate, this important milestone marks an era of returned affordability; Las Vegas' median resale home price of approximately $125,000 is well within the means of the Las Vegas median family income of approximately $69,000.

Posted By: David Kang

Timeframes for IRS' $8K 1st Time Homebuyer Tax Credit

2009-09-07T09:42:00.000-07:00

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The IRS' first time homebuyer tax credit of $8,000 applies to principal residences purchased prior to December 1, 2009. Fortunately for taxpayers, however, the credit applies even if you have owned a primary residence previously! The requirement to be a "first time" homebuyer is simply that you have not owned a primary residence in the last 3 years. See the IRS' Q/A section for additional questions and answers.

This is fantastic news and should provide a much-needed boost to buyers who might not otherwise be able to afford a home. Like all tax-related programs, however, there is a catch, especially in Las Vegas.

Since most of Las Vegas' homes sold are predominantly "distressed" (foreclosure/REO/bank-owned or short sale) we can expect escrow times to be significantly longer than normal. Aggressively speaking, a 60-day escrow is quite fast for some distressed properties - we have a client who has been in escrow for nearly 8 months!

This can cause a time crunch for buyers looking to meet the December 1, 2009 deadline. Working "backwards" on the calendar, we get the following timeline:

Nov 30, 2009 - Last day to close escrow.
Oct 01, 2009 - Escrow begins (assuming an aggressive, 60-day escrow period).
Sep 30, 2009 - Last day to be in contract to purchase a property.

Since most homebuyers have jobs, the availability leaves weekends. Between the time of this writing and Sep 30, there are only 6 weekend days remaining: Sep 12, 13; Sep 19, 20; Sep 26, 27.

Bottom line: if you think you would like to take advantage of the IRS first time homebuyer's tax credit, get cracking! You don't have 3 months - you have 6 days.

Posted By: David Kang

Nevada Assembly Bill 471 (Becoming Non-Recourse for Homeowners Buying After Oct 1, 2009!)

2009-09-01T16:15:00.000-07:00

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DISCLAIMER: THIS IS NOT LEGAL ADVICE - DO NOT MAKE DECISIONS BASED ON THE CONTENTS OF THIS BLOG. OR ANY OTHER BLOG, FOR THAT MATTER. CONSULT YOUR ATTORNEY. PLEASE.

Beginning October 1, 2009. Nevada homeowners who purchase a property and then default on a residential, continuously-occupied, never-refinanced owner-occupied mortgage with a financial institution will be spared the possibility of being sued for a deficiency claim.

In plain English: if you buy a house in Nevada after Oct 1, live in it continuously as your primary residence, and stop paying your mortgage, even if the bank comes and takes your house, you cannot be sued for the difference between what you owe and what the bank gets for liquidating your house! It is a very powerful statute for homeowners in Nevada!

This tremendous decision was passed in the Nevada Legistlature back on May 28 as a part of AB 471 with nary a peep from traditional media. Thanks to Sandra Stahl of Swan Gardiner for pointing this bill out to us! When combined with AB149, it would appear that Nevada's legislative position has made significant changes this year, all of which benefit homeowners.

Legal stuff for those who like to read the source documents:
Smart people always read the fine print and the source documents

Nevada Assembly Links regarding AB 471: http://www.leg.state.nv.us/75th2009/Reports/history.cfm?ID=912
Nevada Assembly Bill 471 Full Text (as passed): http://www.leg.state.nv.us/75th2009/Bills/AB/AB471_EN.pdf

Relevant sections of AB 471 (bold text added):

3. If the judgment creditor or the beneficiary of the deed of trust is a financial institution, the court may not award a deficiency judgment to the judgment creditor or the beneficiary of the deed of trust, even if there is a deficiency of the proceeds of the sale and a balance remaining due the judgment creditor or beneficiary of the deed of trust, if:

(a) The real property is a single-family dwelling and the debtor or grantor was the owner of the real property at the time of the foreclosure sale or trustee’s sale;

(b) The debtor or grantor used the amount for which the real property was secured by the mortgage or deed of trust to purchase the real property;

(c) The debtor or grantor continuously occupied the real property as his principal residence after securing the mortgage or deed of trust; and

(d) The debtor or grantor did not refinance the mortgage or deed of trust after securing it.

4. As used in this section, “financial institution” has the meaning ascribed to it in NRS 363A.050.

Sec. 3. The amendatory provisions of this act apply only to an obligation secured by a mortgage, deed of trust or other encumbrance upon real property on or after October 1, 2009.

Posted By: David Kang

Las Vegas Real Estate: Median Home Prices INCREASE

2009-08-19T14:10:00.000-07:00

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One month does not make a trend, but today's Review Journal article reports that median home prices for both new and existing homes inched up in July 2009 compared to June 2009! At the very minimum, this data point is a significant indicator that we are seeing signs of pricing recovery in Las Vegas.

We eagerly anticipate August's numbers as we have been blogging about and predicting this recovery since April, when foreclosure inventory began decreasing in Las Vegas.

Posted By: David Kang